January 14, 2010
Employed Persons, First Time Home Buyer, Interest Rates, Pre Approval
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On my last blog post I mentioned that clearing away debt is a good (and common) step to take before getting your first property.
The reasons for such actions are two fold.
-Firstly you can help out your debt ratios. In a previous blog post I explained that two specific ratios determine how much you can borrow. By paying down some of your debt you can increase the amount of money the lender will be willing to lend you.
-Secondly it is a great idea to pay down your debt because you will likely have some new purchases to make your property a home.
I recommend that you speak with a quality mortgage professional to determine how to best pay down outstanding debt so it helps you achieve your dream.
January 6, 2010
Employed Persons, First Time Home Buyer, Pre Approval, Proving income
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It is very common for people at this time of year to think back about the year before and to think ahead about what they want to achieve in the coming year.
Most people say that they would like to lose some weight or to be more active. May I suggest another goal for 2010? How about making a goal that by the end of the year you will own your first home?
For most people the amount of preparation to own a home is similar to any medium sized goal.
The steps are generally as follows:
- Get a Mortgage Broker – http://jasonpeatz.com/2009/06/step-1-get-a-mortgage-broker/
- Get pre approved – http://jasonpeatz.com/2009/06/step-2-get-educated-and-pre-approved/
- Clear away any debt that is in your way – I will discuss in up coming posts.
- Get your down payment prepared – I will discuss in up coming posts.
- Start collecting paperwork - http://jasonpeatz.com/2009/07/step-3-collect-all-paperwork-you-will-need/
- Make an offer – http://jasonpeatz.com/2009/07/step-4-put-down-and-offer-and-get-approved/
- Send MLS and Offert to Purchase to your Mortgage Broker – http://jasonpeatz.com/2009/07/step-4-put-down-and-offer-and-get-approved/
- Meet conditions of the lender – http://jasonpeatz.com/2009/07/step-4-put-down-and-offer-and-get-approved/
- Go to your lawyer’s office and sign some papers – http://jasonpeatz.com/2009/07/6-go-sign-some-docs-at-your-lawyers-office/
- Pick up your keys – http://jasonpeatz.com/2009/07/step-6-move-into-your-new-home/
- Smile – http://farm1.static.flickr.com/69/175764184_471aaa850a.jpg
As you can see I have included links to all the blog posts that I have written that relate to the steps above. This process may take some people just a couple of weeks while others months. But the sooner you get started the sooner you can make 2010 a great year.
November 24, 2009
Book, Employed Persons, First Time Home Buyer, Mortgage Insurance, Pre Approval
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Whenever the lender decides to lend money on a particular property they take into account two separate yet equally important parts.
Firstly, they look at the quality of a borrower- their credit worthiness and their ability to make the mortgage payments. The evaluation of the borrower typically takes place in the pre-approval process.
Secondly they look into the quality of the property. What they want to ensure is that in the event of a borrower not being able to make their payments and in turn goes into foreclosure that they can easily market the property and get their investment back. So you can understand that if the house is not at least of average quality then the typical purchaser is not going to want to buy it. The lender evaluates value of this in one of two different ways. If the file is insured then the insurer does their own internal evaluation. If the file is not insured than the lender may request that a third-party appraisal is completed.
One important thing to note is that the quality of the property may take into account things that are beyond the scope of the physical property itself. For example, in a condominium complex, even though the condo complex may be in great condition sometimes the condo financials are not in order.This would be something that the lender would consider to be a serious issue and therefore may not lend of this property.
Why I am telling you this is not to warn you not to go to try different properties but rather to let you know what type of resistance you might find if you decide to purchase a house that is considered a fixer upper.
This is a critical area that needs to be addressed before financing conditions can be met. This is why it is so important that you send all data about the property to your mortgage broker as soon as you can after the Offer to Purchase has been accepted by the seller.
October 14, 2009
Book, Employed Persons, First Time Home Buyer, Pre Approval
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We pay taxes. This should not come a surprise to anyone. All levels of government require that we pay taxes. The city is no exception.
The way that the city of Calgary collects taxes is not through our income or by a tax on goods and services – they do it though the properties that are owned by businesses and home owners. The value of your home as assessed by the city of Calgary lets the them know what your portion of the tax bill will be for the coming year.
Lenders want to make sure you pay your city taxes. They believe that if people pay their taxes once per year (in June) that that tax bill can be hard for some families to pay. They want to make paying your taxes easier for you and this is why they encourage you to pay using a program offered by the city of Calgary called the TIPP program.
The following is an excerpt and link from the City of Calgary explaining the TIPP program.
Property Tax Installment Payment Plan (TIPP)
What is TIPP?
The Tax Installment Payment Plan (TIPP) is a popular program which allows you to pay your property taxes on a monthly basis instead of one payment in June.
Your payment automatically comes out of your chequing account the first day of every month, making budgeting easier and helping you avoid the risk of a 7% penalty.
How does TIPP work?
Each year property taxes are billed in May, due June 30 and cover the period from January 1 to December 31.
If you pay through TIPP you don’t need to worry about the payment deadline or late payment penalties. Your taxes are spread over 12 months, starting January 1, with your account being paid in full after your December 1 installment.
Your installment amount is calculated by dividing your most recent annual tax levy by 12, rounded up to the nearest dollar. This amount is paid through automated withdrawals from your bank account the first day of each month.
When you receive your annual tax bill in May your installment will be adjusted to reflect the actual tax levy, ensuring your account is paid in full by year end.
Your tax bill will show:
- The TIPP credit-to-date.
- The new installment amount for the remainder of the year.
- The date we will start withdrawing the new installment amount.
At year-end:
- TIPP automatically continues from year to year.
- All installment amounts are reviewed in December.
- If an adjustment is made to your installment amount, you will be notified.
http://content.calgary.ca/CCA/City+Hall/Business+Units/Finance+and+Supply/Property+Tax/Tax+Installment+Payment+Plan+TIPP/Property+Tax+Installment+Payment+Plan.htm
October 7, 2009
Book, Employed Persons, First Time Home Buyer, Interest Rates
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The Offer to Purchase is a very important document for when people are buying and selling houses.
CMHC defines the Offer to Purchase as “a written contract setting out the terms under which the buyer agrees to buy the home. If the Offer to Purchase is accepted by the seller, it forms a legally binding contract that binds those who have signed it to certain terms and conditions.”
It is the official document that shows to all parties involved the complete terms of the sale. For example is shows the following:
- Property address;
- Purchaser;
- Seller;
- Purchase price;
- Deposit amount;
- Possession date;
- Financing condition date;
- and many more important pieces of information.
The lender needs this document because it shows them that the person really is purchasing a home, for how much and when the file is closing.
Most lenders will need to see this paperwork before they will even start processing your file.
This is why it is key to arrange to have this document sent to your mortgage broker as soon as is possible. This allows the mortgage broker to add the data to your application and submit it to the lender without delay. In turn you get your approval sooner.
For further information about these important documents see (http://www.cmhc-schl.gc.ca/en/co/buho/hostst/hostst_007.cfm)
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